Correction: Volkswagen earnings story

FRANKFURT – In a March 13 story about Volkswagen’s earnings, The Associated Press reported erroneously that the 9.1 billion-euro net profit figure was attributable to Porsche. The figure is attributable to Volkswagen, not Porsche.

FRANKFURT, Germany — German automaker Volkswagen gave a cautious outlook for the year ahead Thursday after announcing a modest rise in 2013 earnings.

The company warned of a “difficult market environment” with tough competition and sharp ups and downs in exchange rates and prices for raw materials.

CEO Martin Winterkorn was “guardedly confident” about sales and earnings, saying he expected “a moderate increase in deliveries.” The company said revenues this year would fall within 3 per cent of last year’s — either above or below.

The company faces headwinds from a slow auto market at home in Europe, and from a stronger euro that shrinks overseas earnings.

The company relied on its luxury Porsche cars to make up for slowing sales at its mass-market brands and a decline in earnings at its other upmarket brand, Audi. Porsche, maker of the 911 sports car and Cayenne sport-utility vehicle, made a major 2.6-billion euro contribution to earnings, despite providing only a fraction of total sales at 14.3 billion. Porsche showed profit margins of 18 per cent — very high by auto industry standards.

But sales fell 4.4 per cent at the mass-market Volkswagen brand, due to spending on new technology, a stronger euro, and a slack economy in Western Europe. Audi saw its operating earnings slip to 5 billion euros from 5.4 billion euros as it spent more on new technologies and on building out its sales network, while facing “the challenging environment in many markets.”

Volkswagen’s net profit fell to 9.1 billion euros from 21.9 billion euros the year before. The comparison was distorted by a large, 12.3 billion-euro gain for 2012 from accounting effects related to Volkswagen’s takeover of Porsche.